Nutanix .NEXT – fire starting in the belly of the channel

The burgeoning cloud services marketplace could grind to a halt if the reseller channel community fails to get its act together and start taking those services – with their own expertise and IP added in – out to businesses.

There is a paradox around the cloud and it is starting to create a problem that the IT industry and the user community needs to solve between them sooner rather than later.

On the one hand the cloud is the answer to every possible business management requirement any business could possibly face. It is, potentially at least, open and collaborative, allowing users to pull together the services they require, at whatever level of granularity makes sense, and from whatever cloud source has it available.

On the other hand however, getting cloud services to operate in that way can be a fearsomely complex task that can require large amounts of specialist skills that are in short supply. Added to that is the still common tendency for the technology vendors – and some of the cloud service vendors, for that matter - to see the cloud as threat to their hold on 'their' marketplace and their ability to 'own' and hold on to their customers.

This combination means that making the cloud work effectively is the preserve of those enterprises that have the means to afford the staff with the right skills sets, or sufficient resources to employ one of the major systems integrators. For many others that have made attempts to get into the cloud, they have met a path strewn with many boulders. One of the biggest and most common of those has been cost – usually caused by their inability to accurately forecast what cloud resources they might need for the work they plan, and what to ask for (and avoid) when negotiating contracts with service providers.

Yet there are millions of businesses out there for which access to cloud services could provide real benefits to their individual operations and a positive boost to the overall economy. All they need are the cloud service platforms capable of delivering as much of the common tools-and-management required to deliver cloud services cost-effectively, and the help of a team which understands both delivering cloud services and the specifics of their business.

Gap, meet bridge

In other words, the cloud services business and its huge potential user community, needs a channel service capability to bridge the gap that exists between them. Two options for this role already exist – the Managed Service Providers (MSPs), and the Value-Added Resellers (VARs) – yet all the evidence suggests that neither group understands the potential that lies before them.

This suggests that there is now a role for the vendor community to develop new ways of addressing the issue and helping those potential channel partners to grasp what could be a very fulsome and non-painful nettle.

Just such a subject came up for discussion at the recent Nutanix .NEXT conference in Anaheim. Conversations with Chief Marketing Officer, Ben Gibson, and Sunil Potti, the company’s Chief Product & Development Officer, highlighted not only the company’s growing awareness of this problem, but also some of its causes. They also have some thoughts on what can be done to accelerate the change and get potential channel partners up to speed as quickly as possible.

Gibson, as CMO, is in the front line of this work which he sees as, at least in part, having roots in the way cloud sneaked up on business users. For example, when the likes of AWS started it was hit upon by applications developers looking for quickly available, short term resources. Next came the big company departments looking to bypass the corporate IT conservatism by running small, local applications unofficially by not breaching company credit card limits.

To a large extent it is this second group that has both let the cloud benefits genie out of the bottle, and let their inexperience create a price bubble of over-charging for over-specification.

He sees that genie being spurred on by the richer cloud platform services being introduced by the likes of Nutanix.

How do you make it easier to have application mobility, and support between different cloud environments?, even smaller businesses on a public cloud want a consistent, frictionless, easy to operate kind of environment. And there's not a lot of it around, because not a lot of folks have done it over the past five years in production. There's not a lot of `Okay, everyone needs value added resellers to help outsource and make that possible for them’. So I think it's like learning a different language. And it's learning a different business model.

This means they have to learn the economics of running particular applications on particular cloud services. They have to understand where governance requirements might apply, and what the criteria may be fof the choice between running an application in the cloud or on-premise. They will also need to understand how to integrate their own IP offering with the tools provided within cloud platforms such as Nutanix offers to get delivery as frictionless as possible.

As Gibson observes, this is a whole new service offering compared to the `load app on box, shift box, support if necessary’ business model that VARs have been used to:

I think we're still in the early innings of it. I don't think anyone is that far along in the space, because the public cloud vendors aren't interested in everyone having freedom of choice of running their apps on any type of service, running on different virtualization stacks or anything else. But we know customers want that freedom of choice. In that baseball analogy, they are not even at first base.

He also sees the risks of trying to `boil the ocean’ with the skills base that is currently available. That is bound to fail because there are not nearly enough people or dollars or education resources to do it all at once.

“So I think we have to be smart and get our best and brightest and most loyal partners here and work with them. So we have to show them success so we can get beachheads. That way, other partners get to understand the economics behind it.”

Kite flying with a purpose

This approach of leading by example is also the favored Sunil Potti approach to this problem, particularly as much of the real potential for the channel partners is likely to be found well outside of their historical frames of reference. Yes, some of their work will come from extending existing services, such as an established Oracle shop. Here, the steps might be to help start the process of automating Oracle processes, perhaps reduce the dependency on Oracle a bit, maybe add the use of Postgres here and there. Certainly there will be monkeys that can be softly caught that way.

But, Potti sees the bigger prizes coming from developing new applications that take business customers in new directions. The one trouble with this notion, however, is that for many businesses in the channel, they need to see the use case set out before them. And as yet there are not too many of them. And many of those potential channel partners are still concerned about annoying their existing vendor principals, which are often the businesses that also do not get the cloud to well.

For Potti, the answer is to look at the bottom 20% of the channel pyramid of companies, for there can be found the ones that are hungry enough and most willing to upset their existing vendor principals:

Basically, the bottom 20% don't get any love from anybody. But if you choose wisely, there are similar, hungry founders that don't mind taking risks. So they don't mind getting rid a big name vendor. They tend to start taking notice when some of the players at the top of the pyramid start using a new vendor, such as Nutanix, and they become the disruptors.

He sees this starting to happen now and expect to see much more of by the time next year’s conference is held. His prediction is that the top 10% and bottom 20% of the pyramid will get it by then, while the middle 70% will still be still be struggling.

One of the ways Potti sees Nutanix helping a new channel community to emerge is a practice which, at first sight seems wasteful: as well as adding tools to the suite of management and operations services available – all of which have the key goal of making it simpler for users and channel partners to pull together the services their businesses require – the company is starting to drift into developing applications themselves.

This may seem to be an encroachment into markets that are not really the company’s territory, and he acknowledges that in one way it is that. The other side of the coin, however, is he sees it as way to open up new application ideas and see how they work. It is not exactly building loss leaders, more kite flying with real experiments for a serious purpose, and given that they are then based on exploiting the tools and management of the Nutanix cloud, are not a huge burden on the company’s resources.

But does give Potti’s team a good understanding of the process steps that channel partners will have to go through to build their own IP contributions on the platform, as well as demonstrating new application ideas that some of them might well want to follow up on.

My take

It is interesting to see some of the educational steps a vendor is now having to use to help potential channel partners learn where they can deliver real value to both cloud services users and providers. This is, however, essential work for, though they seem strangely slow on the uptake, much of the cloud service provision business may soon stall if there are insufficient businesses selling into the thousands of niche markets that can exploit it